Fool Proof Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 1 cash flow?
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Equipment cost (depreciable basis)
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$65,000
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Sales revenues, each year
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$60,000
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Operating costs (excl. deprec.)
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$25,000
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Tax rate
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35.0%
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